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Closing Bell

News/Business. Maria Bartiromo, Bill Griffeth. A guide through the most important hour of the Wall Street trading day. New. (CC) (Stereo)

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Us 14, California 10, Apple 7, S&p 5, Meredith Whitney 4, Google 4, America 4, Nevada 3, Cnbc 3, Bob 2, Rhode Island 2, United States 2, Schwab 2, Romney 2, China 2, U.s. 2, Aleve 2, Tom Cole 2, Florida 2, New York 2,
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  CNBC    Closing Bell    News/Business. Maria Bartiromo, Bill Griffeth. A guide  
   through the most important hour of the Wall Street trading day....  

    September 24, 2012
    3:00 - 3:59pm EDT  

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lay's potato chips were second and doritos were number three. >> i've always loved ritz for its predictability. it doesn't make any sudden movements. does the same thing all the time. >> i like durability. the snack that keeps on giving. "closing bell" is next. hi, everybody, happy monday. welcome to "closing bell." i'm maria bartiromo at the new york stock exchange. mondays have been bad for stocks but today we're seeing a bit of a trend that's being bucked to the upside. >> a bucking trend. i'm tyler mathisen in for bill griffin. he'll be back tomorrow. we're starting to trend a little higher but it's been a tough day for technology. apple shares taking a hit. sales of 5 million iphone 5 s over the weekend. not enough for some analysts. they had expected more.
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and i guess selling 19 phones a second is not enough. on the flipside, rival google soaring today. shares there now poised to close at an all-time high. look at them, almost $750 a share. facebook taking a hit after barron's said the stock is still too pricey. let's take a look where we stand as we approach the final stretch on monday. dow jones near the highs of the day. it's been a quiet session. up 12 points on the industrial average, fractional move at 12591. nasdaq and that's where you have the movement. down 0.5%, 15 points lower at 3165. tech sliding the market. s&p similar chart pattern, just shy of the high of the day but a declines on the standard & poor's. we are in the final week of the month and quarter. the question is now is the time to take some money off the table, given all the concerns
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that are percolating ahead of the november elections and how far the market, frankly, has run over the summer. matt mccormick says the market is right for taking. todd of black bay group is telling his clients to build some cash reserves. >> joining us with rick santelli. good to have you. thanks for joining us. >> my pleasure. >> matt, let me get your take on earnings. i've been hearing today that there's a bit more worry about earnings. you have a lot of momentum in this market. we know there's a bid to this market. even today you have to see this as a victory with a gain on the session after where we've come from. are you worried you want to selling into it given the earnings on the horizon? >> i think when you look at the names that have moved, they've been low-quality, nondividend stocks, fed liquidity injections. you're seeing a lot of insider selling. not a lot of optimisms. ceos on sitting on the
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sidelines, waiting for clarity. if you're grg to take a profit, take it in names that have moved too fast. dividend-paying stocks that haven't had a big move. caution is the name of the name right now. i would rather be risk averse than too aggressive with the uncertainty looming in our future. >> you want to sell? >> i want to take profits in names that have moved too far, too fast. you look at the names that have moved, it's not on earnings, it's not on fundamentals, it's not on the underlying strength. it's on mass liquidity and that's it. i would play with house money and go into names that pay you. >> you say build cash, so you can go long in 2013. what makes you think 2013 will be any better with the fiscal cliff looming and otherwise? >> that's what matt is talking about, the fed. the fed is going to be the gravy train for the equity requests -- the bulls for equities. you want to go long. you want to take a very big position into equities. you could go across the board next year.
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if we do have a bit of a selloff in the fourth quarter because of a quiet earning season, it might be time to start building up that war chest and start positioning to go long. go long heavy, too. i'm talking about maybe using leverage in some opportunities because next year is going to be a great year for stocks. >> what do you want to sell, then? >> i wouldn't sell anything. >> you just said raise cash, right? how are you going to raise cash? >> well, look, if you want to lock in some gains that matt was talking about, there's nothing wrong with that. but realistically if you want to start trading -- if you want to start investing, this is a great opportunity. the fed is there to bail us out, guys. it's unlimited. and if you look at the first two rounds, it was great for the stock market. i'm not saying it's great for the long-term impact of the economy. i'm sure rick will get into that in a second. realistically, 2013's going to be great for the bulls. >> rick, has the effect of the fed's move already been played out insofar as stock prices are concerned? >> i don't think is-t has in
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terms of stock prices. i think it has a bit in fixed income. it's still riding high in terms of mbs and still kind of pitting one country against another. if you look at the chart of the dollar/yen, the yen is getting close to testing what was a seven-month low, right on statement day, on the 13th is, of course, everybody wants to weaken their currency to help exports. ly tei will tell you this, they want to ride that fed gravy train in stocks. here's what i hear, we'll put real tight stocks below value. the worry is, how many other strategists have the same sell stop around the loengsd stop? >> todd makes the right point, it's qe forever, as bob pisani called it, but what do you think -- >> low quality stocks, risk asset. when you look although the market, i think people look at the law of diminishing returns. march '09 lows you saw qe2, 26%
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return. qe3 is likely to be roughly a 9% return. we've had a 3.5% move in the s&p this month. my point is that the market is like an attic. it needs liquidity and highs aren't enough to sustain it. i disagree. i think 2013 will be a very difficult year. i want companies i know can pay me a dividend, that know i will make earnings. i think the effect from the fed will wear off. people are going to eventually focus on fundamentals, not the massive liquidity. i do not want to own any stock dependent upon the government for its performance. >> that's what makes the market. appreciate your time tonight. great conversation. we're in the final stretch of trading for a monday. 50 minutes left before the closing bell sounds and this market is showing fractional move though the nasdaq is the big loser of the major averages, it is largely due to apple down 1.5%. >> stick around, we're just getting started with the heavy hitters. coming up on this very big edition of "closing bell."
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noted banking analyst meredith whitney has been souning the alarm on municipal bonds for quite some time. >> there's every effort on the part of the states to prevent really this tidal wave of defaults which is going to happen sooner or later. >> so why do investors keep pouring their money into munis? she joins maria exclusively next. you might be surprised to find out which presidential candidate is calling for means testing, social security and medicare. >> people with higher incomes won't get the same high growth rate in their benefits of people of lower incomes. >> is that a political blunder or just an honest assessment of the reforms we need to get our fiscal house back in order? it's all ahead on the "closing bell." americans believe they should be in charge of their own future. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms.
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welcome back. noted financial analyst meredith whitney best known for her call on the banks ahead of the
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crisis. she then rocked the financial world again in 2010 when they predicted a wave of municipal bankruptcies. that forecast has not come to fruition yet. since meredith whitney made the bold call, muni bonds are up better than 12%. meredith is standing by her call on munis and is out with a new report she says justifying her view. meredith whitney joins us. good to see you. there was an article this weekend, i guess, from the new york times saying some of these states are struggling, still. you've been talking about this so much. despite the worries of these bankruptcies we're still seeing demand in the market. >> the municipal bond market supply and demand has nothing to do with fundamentals. rates are incredibly low. people are desperate for yield. people want return. that's one thing driving the municipal bond market. the reality is each state is struggling uniquely. the more you have a lack of agreement between the pensioners unions and the legislative
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officials and those who vote for them, the more you're going to see defaults. that's the worst case scenario. that's the worst outcome of this. you're seeing consistent -- you've had three defaults so far in california. you've seen defaults in rhode island. he see almost defaults in michigan and pennsylvania. and i think those are setting the precedent for more defaults to come. hopefully we don't see those. but what happens is if you can agree to change and -- where everybody takes a haircut. effectively the workers get in default -- already taxpayers have gotten defaults in terms of social services. if they don't agree, they go to bankruptcy and effectively the bondholders get defaulted on as well. >> today at this point we see, what, about a $1 billion, it's a low number in terms of expectations. how worse does it get? since you've seen the call we've seen some governments come across and come up with solutions to try to fix the problem. about the we're only seeing $1 billion of defaults.
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>> we published our first analysis of the states in september, september 2010. we came out today with our third edition. what you see is a clear -- two clear factors. one is structural. so, for states like california, nevada, new jersey, they're in such deep structural decline, it's very difficult to see any type of consumer spending growth, any type of real economic growth, and that pressures the economy still further. you also see things in terms -- revenues are still pressured. for all the states, state tax receipts are still tracking just 2011 levels but spending is at record highs. there's a structural gap there. that structural gap leads to continued cuts to the budget. leads to elected officials having to raise taxes, putting pressure on housing. many of these states, housing drove more than 17% of the
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states' economies. since housing has been reduced dramatically, the states are really on their backs in terms of wherewithal. >> that's probably one of the better areas of the economy, recovery, housing has shown some signs of improvement. >> on a very low base. you're not seeing it in terms of the numbers helping states. so there's a clear structural issue. the other issue is a leader-dependent issue. you see states like rhode island making dramatic reforms to pensions, yet you still had central falls, which pushed rhode island over the edge in terms of making these reforms. and you see states like florida making necessary changes. you see states like indiana years ago making necessary changes. but then you still see problems in states like new jersey, california, nevada. >> are those the states -- give us the states and cities you would avoid most right now. >> bonds has never been part of my major focus. my majorus is on the
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economics that drive -- or the economics, rather, that are resulting from the states' financial crisis. >> but what on the landscape may drive the market? >> i think the market is driven -- certainly municipal bond market is driven by supply and demand. everybody knows how bad the financial situation is for states and municipalities. municipalities get 41% of funding from the states. the states are cutting back. we haven't even gotten to your favorite subject, the fiscal cliff yet, which is going to send this situation to further disarray. i think from the standpoint of investors, you can invest along all these lines in various industries and bet with the strong states and bet against the weak states on individual names, individual sector basis. >> that's what i want to ask you. which individual cities and states are awe voiding right now? for example, we know that california is one area that's obviously struggling, and yet california is issuing bonds today. are you recommending avoiding california? >> i'm not talking -- i'm interested in equities.
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i don't care about -- i mean, the municipal bond market is going to have defaults. they're happening. it's a fact. it's going to happen. that was never the focus of my work. the focus of my work is where do you want to invest over the long term? states like california you see have not only -- let me give you an example. the real estate dependent states, arizona, california, nevada, were outperforming the central quarter states by a factor of 20% from 2000 to 2008. now they're underperforming by a factor greater than three times. you could say those states are effectively dead in terms of contribution to the overall u.s. economy. but states from north dakota down to texas over to colorado that are thriving. you see certainly logistics companies there, manufacturing companies there, transportation companies there, health care, education stocks there, versus all of the inverse for
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california. so, california is going to cut again if brown doesn't get his tax increase on the wealthiest californians passed in november, he'll cut another $6 billion from the education system, cutting back on prison system -- >> that has implications. >> real life implications. that's what clients are interested in. >> we had alexander labenthal on last week. listen to what shes. >> defaults year to date are up versus last year. put 3.1 billion versus 2 billion last year, year to date. so still relatively small and not the enormous number that has been bandied about in the past. 57% of locality, city, states, are sail saying they're better able to meet their needs this
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year as opposed to last year. >> what's your take on that? >> i mean, it's an opinion. the facts are that the municipalities have less money today than they had a year ago. they will have less money tomorrow than they had a year ago. most municipalities increased property tax, so that's a one-time spike that's gone. states consistently are cutting back funding to municipalities. you know, it's -- it's her opinion. time will tell. >> but the fact is -- sorry. >> it's not a good story. i mean, i think that you have examples of politicians, elected officials doing the right thing and improving the state's finances. but as an individual, ann a business owner, you're not going to go to the broken states. you're going to the stronger states because you're looking at state sustainability so that means more revenue goes to stronger states, less revenue left over for weaker states that trickles down or doesn't trickle down to municipalities.
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i think her position is a riskier position than mine but, you know, time will tell. >> which is why i'm asking about muni bonds because i don't want to invest in a city or state or municipality if they're going to default or go bankrupt. on the economic landscape from the actual investing within that -- >> i never said states were at risk because states always have the ability of cutting funding to the municipalities. it's the local governments that are at risk. you know, two-thirds of the market is the revenue bonds, which are, you know -- or greater than that, which are revenue bonds, and are not supported by tax increases or taxpayer dollars. what people don't appreciate is pensions are also supported by taxpayer dollars. pensions only in the last couple of years have started to be counted into the overall debt equation of these states. states don't look as healthy as they are perceived to be. >> sounds like the country, by the way. >> most investors in municipal bonds look for yield and duration and don't care about anything else. that's dangerous. >> let me ask you about the
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banks and the market here. we have so much momentum in equities with central bank stimulating everything. the banks have been the leading sector to invest in. would you be buying into this momentum we're seeing in the financials or do you want to sell it? >> well, right now the banks are yielding less than the overall s&p. and i think that there are certain banks that i like a lot that all tie into state research. there are the large banks i don't like so much. had you a rally of what banks will do in the third quarter is right up assets because of all the qe3 purchasing programs. so, you have a risk-on on trade. that's not really like a -- a trade is not my idea of investing. i like to buy long-term growth names. you know, some stocks were oversold and some stocks are expensive. you know f you look at a trade between bank america that's why it's so cheap and jpmorgan is still fairly valued, there's some interesting trades going on. in terms of overall investments,
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in the large cap financials, i'm a little bit -- i'm a little worried to say those are great long-term investments. certainly trading opportunities. we'll see what happens with the mortgage purchase going on. i think wells is going to be an interesting name in terms of all of the fed purchase programs related to the mortgage group. for financials -- >> what does that mean to wells? >> well, wells has a very large mortgage portfolio that it can just ride up -- as these assets appreciate, they can just ride up. mortgage servicers look good. i'm more interested in the financials in terms of around the edges. as big banks have to get smaller or forced to get smaller because of regulatory change and also because they need to deleverage their balance sheet, who benefits? i think there are a lot of interesting names there. >> the layoffs, are they continuing, you think? we heard from goldman sachs, bank of america. what's your take on job cuts on wall street? >> the banks have been overstaffed for a really long
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time. if you think about all the other industries that have gotten more competitive, more profitable, the banking sector and insurance sector have been laggards, behind it. interesting for goldman, they're cutting their highest paid people. it's not a great time -- i think the industry is as bad as i've seen it. it's certainly not a great time to be on wall street. >> good to have you on the program. meredith whitney joining us on wall street and the muni bond situation. 35 minutes until the closing bell sounds for a day. market flat on the day. four points up on the dow industrials. will republicans give in on tax hikes if president obama wins re-election? our guest next says yes, and he's a republic. tom cole will explain why he thinks the norver tax pledge will be out the window. only apple could sell 5 million new apple iphones and disappoint investors. [ male announcer ] this is anna, her long day teaching the perfect swing
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welcome back. congress has adjourned for five weeks without addressing urgent taxes, spending issue. no surprise. a key issue in the stalemate, a core group of democrats who won't touch entitlement on one side and a gop commitment to no new tax. many republicans have even signed an antitax pledge designed by grover norquist.
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>> our guest says if the president wins that will have to go out the window. joining us tom cole, republican from oklahoma, views the election as a referendum on taxes. nice to have you with us. it's a referendum on taxes but as candidate romney said some months ago down in florida, if 47%, 46% of the households are already paying no taxes, is his message of lower taxes going to resonate with that significant portion of the electorate? >> i actually think that message does resonate. most americans know instinctively higher taxes mean slower growth, fewer jobs. whether you're paying income taxes, everyone has a strong interest in robust economy and a low tax rate is part of that. >> sir, if obama wins re-election, will republicans have to give up on their no tax hike position? >> the question is not really whether they'll give up. no, they don't have to give up. the problem is all the bush tax
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cuts run out automatically. republicans could vote to extend them unless the president is willing to sign that extension. then they run out. that, by the way, could have happened in 2010. the only reason we were able to avoid it then is the president, i think, wisely decided the economy was too weak and we bargained with him. gave him an extension of unemployment benefits in exchange for the bush tax cuts. this time he told us he's not willing it to do that. >> the president has been very clear. he only wants to raise taxes on anyone making more than $250,000. the question again, are you going to give in? are you going to give into higher taxes? >> no. those taxes go up, maria, automatically. >> they have to address the fiscal cliff at some point, right? you have to address the fiscal cliff at some point, right? >> no. the physical cliff -- the physical cliff and the bush tax cuts are two very separate items. the bush tax cuts run out september 31st, period. unless congress and the president both agree, you know,
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then some of those are going to run out, or all of them, theatericly. i don't think that will happen. if the president wins, he has the whip vote. we should know that. >> you signed -- >> unless he wants to deal with the president. >> you signed mr. norquist's pledge. can you imagine any circumstances under which you would go along personally with tax hikes in exchange four democratic flexibility on imperatives ornishtives like solving issues of medicare and avoiding big defense cuts? >> well, i am not going to get in theoreticals.
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it can lower rates while we eliminate loopholes. i think that's the solution. president clinton floated that idea several months ago. why don't we keep the bush tax cuts in place for a year and go to work and redesign the tax system. i think that could be a very pro-growth answer to this. but the president holds fast and refuses to support republican extension of the bush tax cuts, he has the ability to stop those tax cuts from being extended. >> if the president gets re-elected it sounds like taxes are going higher. >> that's what he told us. >> what are youing to give on? >> we will do whatever we can to stop it. >> what are you willing to -- >> i'm willing to look at a variety of tax proposals, i'm willing to look at the deductions we have now. i'm not willing to look at higher tax rates. i think that would be very bad for the economy and would be, frankly from a republican standpoint, we would be breaking our commitment to the american people. remember, those bush tax cuts aren't permanent.
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they run out. now, if we have a president romney, your rates won't go away. >> congressman cole, thanks for being with us. high other the dow by 11 points. the nasdaq is off 15. much of that from apple's decline. >> record iphone sales just not enough for apple investors. the stock down, a big drag on the nasdaq. is this the apple selloff many predicted or a short-term buying opportunity. and defense companies preparing to be bombarded by billions in automatic cuts that we were just talking about unless congress acts soon. which defense stocks will feel the greatest effect? and is our national security at risk? we'll debate that and more coming up. this country was built by working people.
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tale of two stocks, rivalry between apple and google. >> google and apple in the tech war heating up apple iphone 5 sales disappointing the street. selling 19 iphone 5 units every second. while apple moves lower, google
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gaining 34%, best performing stock on the nasdaq 100 and even on a technical basis, google start looking strong, trading well above 50 and 200-day moving average since july. >> thank you so much. apple getting hit on two fronts. somehow selling 5 million iphones is disappointing to wall street. plus, reports of riots at a foxconn factory in china. >> it seems crazy to call apple's 5 million weekend a disappointment but no other way to slice it, one analyst had 6 million as the low mark for expected sales. we don't know whether the issue is supply or demand. if it's supply, the issue might be that apple slowed down estimates shipments for the 22-country launch. we'll have to see what the tone is on the earnings call in a month. the street wants more than 40 million in the holiday quarter. then there's foxconn, official
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word from contract manufacturer is 40 injuries were injured at a privately managed dorm and 2,000 people were involved. apple is referring all questions to foxconn and they say work will resume tomorrow after suspended today. a reporter from shanghai evening post a month ago said iphone 5 back plates were produced there. >> were expectations too high or is selling 5 million of anything over a three-day period something to be of awe of, even for apple? >> brian white says the story was huge and will get better for apple. max of greencrest capital says expectations were a bit too high. let's go to max on this. why do you think some expectations got out of control? >> i think we know there are some suppliers expressed. we also know whenever apple has a super hyped release, there's complaints. this time it's about scratched back cases, a lousy mapping app
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and some difficulty with just phones in transit, holding back for other country releases. and then analysts get into a bidding war of jacking up various whisper numbers, there's the possibility those whisper numbers gallup so far ahead that some disappoint is more or less baked into the cake. >> brian, what do you think? even you expected sales between 6 million and 6.5 million, which it didn't hit. is 5 million iphones in the opening weekend a disappointment? >> i think the best indicator we should focus on were the preorders. preorders came in at 2 million versus our expectations of 1.3 to 1.5 million. supply constraints don't impact preorders but they can impact the weekend sales which is what we saw today. >> so overall were the numbers good f you take the preorders and you take the weekend sales and you mush them together, is this a hit? is it something less than that? >> i think the skeptics are going to be proven wrong. this is the biggest upgrade
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cycle in consumer electronics. we did a survey over the weekend that indicated 35% of the iphone 5 buyers were upgrading from the 4s. unprecedented. last generation, just a year ago. this going to be a home run. i just remember last year, i ordered the 4s about 20 hours into the preorder period and got it. this year if you waited an hour, you didn't get it. it was a two-week delivery time. >> that's amazing. we get news of the riots at foxconn facility. how serious is this? people complaining about the scratching of the black iphone 5 and then the mapping. are there bigger concerns? >> on the margin i would put scratching issue minor. we see that with a lot of the iphone releases.
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foxconn is a big deal because apple deals with the socially conscience people that set the trends and the more they learn about apple's labor practices, the more they could get upset. if you saw footage of the occupy wall street, it looked like an apple expo. i think we should be looking at trail off in the older models of the iphone, which they still need to hit to get higher level profit numbers. when you change the case and size of the phone the way apple did, it's hard to sell the old phones because they look different from the new ones. >> that's the new one, right? black back, a little bigger -- >> let me check that out. >> this is the new one. it's a lot thinner. >> a little thinner. >> yeah. >> that's mine. >> how did you get -- >> it's 20% lighter. it's amazing. >> much lighter. >> it is thinner but lighter, and 20% lighter. >> i like it. >> yeah, this is a lot lighter. gentlemen, thank you very much. appreciate it.
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>> this is for you, brian. the call's for you. >> thank you, guys. we appreciate it. one more question. would you buy apple stock here? >> i would absolutely buy apple stock. we have a target of 1111. >> i think you're on the street. 20 minutes before the end of the trading session. dow industrials up five points here. nasdaq negative but largely due to apple. >> is something about to happen that will -- what will it take to jump start the markets? top strategists will weigh in next. you may be surprised to find out which presidential candidate wants to means test entitlement programs like social security. >> higher income people won't get as much as lower income people. and by virtue of doing that, and again that's for future retirees, by virtue of doing that you're able to save these programs on a permanent basis. >> mitt romney gets more specific than ever before -- about the hard choices necessary to fix the debt problems in the
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down with mary schapiro. we got into the controversial talk of high frequency trading. >> the high frequency traders, the dark pools, have an unfair advantage. how do you get the law of the land even so everyone is following the same rules and some fast traders aren't able to put their bids in sooner than others so they're getting a better price and beating the individual out there? >> you know, it's so important that investors understand that they -- and that the markets provide a fair opportunity for everybody to participate. there is more work to do in this area, to ensure that those with access to technology don't have an unfair advantage and that all customers' order have an equal opportunity to benefit in the marketplace. >> let's bring in our guest for their reaction and more with us today, richard bernstein, cnbc contributor, and harry heartford from causeway capital management. harry, let me begin with you. how much, if at all, do you think that the high frequency
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trading undermines the individual investor's confidence in the marketplace? >> well, i think that's a really important point insofar as it's the investor's confidence as opposed to access to cheap trading, it's the volatility that is engendered in the stock market as a consequence of high frequency trading, large amgts of volume. i probably shouldn't say this in the new york stock exchange but i genuinely think the average investor is at a disadvantage because there is greater volatility in the having access to cheap trades. >> can the s.e.c. do anything about it? >> i'm sure they can. the question is, if they chose to. you can institute controls, perhaps levy taxes or make some changes to the speed at which the computers can react. >> but are you hurting the marketplace because you're actually taking away liquidity? >> i don't think you're hurting the marketplace by taking away
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liquidity, no. i actually think that there's a big distinction between liquidity and actually being able to trade stocks in a genuine -- for an investor's perspective. >> i don't want to get too deep in the weeds but liquidity generally is a good thing but it's not generally an unmitigated positive, is it? >> a couple things. i don't think liquidity of a nanosecond differs from liquidity of a second. the important thing is what liquidity is supposed to do is reduce the cost of capital for companies issuing stock. and if harry's right and individual investors are getting scared from the volatility, that increases the cost of capital for corporations. i would argue there is a downside to all this liquidity. what's the difference between a second and a nanosecond, don't think that's going to affect the economy. i think it's important for individual investors do understand the economy does not change in a nano second. it's like watching paint dry. if you see volatility, i don't
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think you should get that scared. >> the broader issue is the confidence on the part of the individual, the confidence of the investor class. are they getting a fair share or losing out here? the s.e.c. is supposed to be monitoring all of this stuff but they're so over their heads. let's face it, she didn't say anything in that sound bite and we're watching her take on all this additional business because of dodd/frank. can they handle it? >> i look at it very simply and i say, again, what's the difference between liquidity of a second and nanosecond? it can't be any difference there. if we know that's scaring people and affecting the cost of capital, let's curtail it. no one has showed how high frequency trading has lowered the cost of capital. if they could show that data and show this is beneficial to the capital formation process, not to the quick trading in and out, i think they might have a case. right now i think so the onus is on the traders. >> quick thought. >> capital formation process of the exchange is really, really important of all of this.
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ultimately that's what the exchange is here for. to bring capital to companies so they can invest and grow their business. >> absolutely. >> great to see you. there are about -- >> rich bernstein, see you soon. >> -- 14 minutes of trading. the dow has now turned negative by about four points. the s&p is down about two. composite nasdaq is down about 18. >> how about home builders? >> they have been red hot. >> that seems like a great omen for the housing market but someone says buyers beware. >> and wednesday on cnbc don't miss a rare interview with the twitter ceo dick costolo. what do you to want hear from him? tweet your questions using the hash tag ask twitter. [ male announcer ] this is sheldon, whose long dy setting up the news starts with arthritis pain and a choice. take tylenol or take aleve,
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details. >> we always talk about when oil goes up sharply, gas prices seem to go up sharply. when oil goes down sharply, gas prices don't seem to go down sharply. take the last five trading days, for example. you have crude down about 5%. you have gas futures and prices at the pump only down 1.5% or so. obviously, not quite correlating. now, the experts will say it takes time to feed through, so on and so forth. guys, it feeds through pretty quickly on the way up, so there's a bit of a disconnect there. most people don't like it. i know if griffith was liking, ellike that graphic. >> i like it. i'm here. thank you so much, brian shactman. prices down 1.5% despite an inexpressi . they found a floor but have they found a ceiling? let's take a look at "talking numbers" on home builders. carter worth is with me and on
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the fundamental side of the story, rbc capital markets. thank you for joining us. robert, let me start with you. what did we learn from the earnings out of this home builders, lenar this morning? >> the recovery is occurring at a faster pace than most investors think. what's more exciting is they posted 44% order growth. so, these guys are going to create a tremendous backlog. we think numbers across the street are going to go up in response to what we learned today. this is an extremely strong sprint. >> still coming off a low base, obviously, carter. what do the charts look like? >> what you started with, the fact it's down and k.b. as well, that's a testament to how price leads the fact. these stocks have tripled off the low in anticipation of this very good news we've now seen. this is the home building index. right now we're 35% above the 100-day moving average.
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that's a rare circumstance. that's only happened seven, eight times in the last 20 years. the next chart shows the exact same thing. right now we are, again, 35% above trend. that's only happened seven times. on average, once that happens, you're down in the ensuing month, 3%, 4%. so, the facts are that prices have discounted a great deal. even the very good news that's come out. >> so, do you look for a catalyst to take them higher or are you worried? >> we just had the catalyst. we just had earnings -- >> there's no catalyst. continue to see good news? >> you have to deliver further. in fact, we have lenar here. you can see this pattern, same thing. it's so far above trend that this move, news comes out, it's already priced in. so at this point, who are you going to sell your stock to if you're buying it today? you have to be in for another three, four months. >> good info. thank you so much. we'll see you soon. >> marimaria, up next, we'll co
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back with the closing countdown. can this market finish with a flair and a rare monday win? we already know about the masstive tax hikes on the line if the fiscal cliff isn't fixed soon. did you also know falling off the cliff will have a huge impact on saving for your kids' college education? you're watching cnbc. bob, these projections... they're... optimistic. productivity up, costs down, time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.
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will it be one of those rare mondays lately where stocks end on the plus side? doesn't look that way right now. art cashin just told us most of the volume at this point waiting to close is on the downside. right now the industrials down 18 points. the nasdaq down about 20 and the s&p 500 about 3.25 to the negative. richard and peter back with us. when we were speaking a few minutes ago we talked about volume and liquidity. didn't get your thoughts on the market as we go through the end of the year. what are you looking for, a good time to invest or sit tight? >> i think it's probably going to be better time over the next
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6 to 12 months than people think right now. pu couldn't ask for people to have a more bearish view of what's going on. look at what the elections is all about. i think people will be surprised. the earning season could be a little messy. the dollar is up, foreign growth is not good. the multinationals are still having trouble. >> but you like some of the smaller american focused manufacturing companies. >> i do. >> and the smaller banks that finance them. >> i do. i think there's the beginnings of what people call the american industrial renaissance. we're gaining market share here in the united states and the riots in china over the weekend support our notion that in the future do you want to put manufacturing facilities overseas or in the united states? this weekend is why you want to put them in the united states. >> peter, tell me what the market right now is saying to you. it would seem to me that since bernanke came out a week or so ago with the announcement of qe3 that the market has kind of moved back a little bit. we've had a few sort of down days as though the market were saying, he gave us what we expected and now it's time to get a little smart.
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>> it's time to get smart. the earning season could be choppy. i think a lot of people are waiting for that. actually, that's a smart move. don't think you'll see much in the next probably three weeks that will motivate anybody in either direction very seriously. i would like to say i'm a little more positive about it. i think i might be in the minority on this, but i do think we'll probably see some surprises -- >> you got the earnings season right up against the election, which comes two weeks, three weeks after that. earnings will still be going on in the middle of the election. >> could be a very interesting time. if you're not an investor, it might be the best time to get involved. >> on break, peter, you mentioned google. it's close to if not all-time high. 750, 749 a share. what does that tell you? >> tells us the business model is startg